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Manually Moving Stop Loss Instead of Trailing Stop
By Davorin Sadar of Markssin
Why we do not use trailing stops? We like trailing stop. It is very useful function for automatic trading. When we are not able to actively watch the market we would certainly let trailing stop to take us out in profit. The only thing preventing us to use trailing stop in our daily trading is that we can not tell our computer in advance to watch all the variables we can, and to judge things accordingly. It is far better to move stop loss manually, because curency trading is not a smooth ride. It jumps, dips, rises, tread water, wave, breaks resistance, or falls through support. Trailing stop is just a predefined number of pips that can't take into account playing around support and resistance levels, sudden quick reversals etc. It is higly probable, that a cross will retrace after breaking through support forcefully but it is also much more probable that it will test former support as new resistance. We are much safer if we stay above resistance than below even if it only means 10 pips difference. Trailing stop does not take into account these bumps in a road. It tends to close the trade prematurely. If we are able to monitor market movements on hourly bases, manual movement of stop loss makes far better strategy than trailing stop. If, on the other hand, you are away then let the machine do it`s work and let it close the trade at trailing stop.
This intel first appeared on: http://rurzag.wordpress.com/
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This intel was contributed by Rurzag
Rurzag
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May, 2012
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